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Client Alert

This initiative by the Attorney General is effective immediately and is just the latest example of California’s effort to increase enforcement of laws aimed at protecting the privacy and data security of individual consumers.

The California Online Privacy Protection Act (CalOPPA) is a broad privacy rule affecting any organization that collects personally identifiable information (PII) from California residents. Now, the California Office of the Attorney General (the Attorney General) is seeking the public's help to try to enforce it, and all entities that collect PII through online tools or mobile applications should take note.

On October 14, the Attorney General launched a new online form that consumers can use to report privacy policy violations. Citing the need to enhance transparency in the Internet of Things, as well as to fill privacy gaps caused by nonexistent or improper disclosures in existing mobile applications, particularly health-related applications,1 the Attorney General hopes that the tool will increase the ability of the California Department of Justice to identify and notify those who are in violation of CalOPPA.

CalOPPA requires any operator of a commercial website or online service, including mobile applications, that collects PII, such as names, addresses, email addresses, phone numbers or Social Security numbers, from California consumers to post a privacy policy. The privacy policy must include information about the categories of information collected, the types of third parties with whom the operator may share that information, instructions regarding how the consumer can review and request changes to his or her information, the effective date of the privacy policy, how the operator responds to “Do Not Track” signals, and whether third parties can collect PII about users. Operators have a grace period of 30 days from being notified of noncompliance within which to post a privacy policy. Failure to do so is a violation of CalOPPA.

Importantly, CalOPPA applies to any company that obtains PII from California residents, regardless of whether that company is based in California or is targeting California residents.

The Attorney General has sought in the past to enforce violations of CalOPPA as “unlawful, unfair, or fraudulent business acts and practices” under California’s unfair competition law.2 In 2012, the Attorney General sued Delta Air Lines for failing to include a privacy policy in its “Fly Delta” mobile application. In the Delta case, the Attorney General sought to enjoin Delta from providing the mobile application without a CalOPPA-compliant privacy policy and to impose up to $2,500 in penalties for each time a noncompliant mobile application was downloaded by a consumer. While that suit was ultimately dismissed on federal law preemption grounds peculiar to the airline industry,3 it demonstrates the potential for significant liability as a result of regulatory enforcement for violations of CalOPPA.

The new online form allows consumers to report several types of violations:

A violation resulting from a missing privacy policy. The form seeks to establish that no privacy policy exists at all and to gather information about whether the consumer has contacted the company directly to request its privacy policy.

A privacy policy that is too difficult to locate. The form solicits information about how many clicks it takes to get to the privacy policy from the home page of the website or mobile application and whether the icon or hyperlink to the privacy policy was hard to see because it blended in with the background, was too small or was too far removed from the main text of the page.

An incomplete privacy policy. The form asks consumers to provide information about what CalOPPA-required information is missing from the privacy policy (e.g., the effective date of the privacy policy or the categories of PII collected).

A failure to provide a notice of a material change to the privacy policy. Here, the form asks the consumer to identify what changes the company made to the privacy policy without notifying the consumer. The changes are described broadly to include any changes to whole sections of information required by CalOPPA (e.g., the categories of PII collected or the third parties with whom the PII is shared). The breadth of what can be reported as a material change could indicate that the Attorney General takes a broad view of what privacy policy changes are “material.”

The form also allows a consumer to report a specific violation of a privacy policy if the consumer believes the operator of the website or application is not following the representations made in its existing privacy policy.

It is unclear if the Attorney General intends to use the results of the information collected through the form other than to directly notify companies of violations of CalOPPA. For example, will the Attorney General make the information related to verified offenders public as part of a “name and shame” program? In addition, it is unclear from the announcement of the online form whether the information would be eligible for disclosure under California public records laws or whether the Attorney General would take the position that such information should not be released on the grounds that they are unproven allegations of misconduct, as is the Attorney General’s standard practice with regard to consumer complaints today.

This initiative by the Attorney General is effective immediately and is just the latest example of California’s effort to increase enforcement of laws aimed at protecting the privacy and data security of individual consumers. With plans to develop a tool to proactively identify mobile apps that may be in violation of CalOPPA on the Attorney General’s agenda, these efforts show no sign of abating. Consequently, privacy compliance programs that ensure documentation of appropriate policies and disclosures are more important than ever.

Pepper Points

To avoid the possibility of being identified and reported by an individual consumer to the Attorney General, companies operating online services that collect PII from California consumers should review their websites and mobile applications to ensure they include a CalOPPA-compliant privacy policy.

Additionally, the creation of an appropriate privacy policy should not be an afterthought when launching a new service. Development of compliant privacy disclosures should be an integral part of the rollout of any new online service before it launches.

Use of a “cookie cutter” privacy policy that is not tailored to an operator’s specific service should also be avoided, as false or misleading promises within a privacy policy can subject an operator to potential liability for deceptive trade practices under the Federal Trade Commission Act as well as the law of California and other states where the operator does business.

Participation of many internal stakeholders may be required to identify the ways in which a business collects, uses and discloses PII through a website or mobile application, so preparing an appropriate privacy policy is not a trivial exercise. Conducting that exercise proactively without the pressure of having received a notice of noncompliance from the California Department of Justice is worth the effort.

The material in this publication was created as of the date set forth above and is based on laws, court decisions, administrative rulings and congressional materials that existed at that time, and should not be construed as legal advice or legal opinions on specific facts. The information in this publication is not intended to create, and the transmission and receipt of it does not constitute, a lawyer-client relationship.